Fed sticks with its stimulus

WASHINGTON — The Federal Reserve said Wednesday that the U.S. economy has strengthened after pausing late last year but still needs the Fed’s extraordinary support to help lower high unemployment.

In a statement after a two-day meeting, the Fed stood by its plan to keep short-term interest rates at record lows at least until unemployment falls to 6.5 percent, as long as the inflation outlook remains mild. And it said it would continue buying $85 billion a month in bonds indefinitely to keep long-term borrowing costs down.

Speaking at a news conference, Chairman Ben Bernanke stressed that while the economy has improved, the Fed won’t ease its aggressive stimulus policies until it’s convinced the economic gains can be sustained. An unemployment rate of 6.5 percent is a “threshold, not a trigger for any rate increase, he said.

Bernanke also said the Fed might vary the size of its monthly bond purchases depending on whether or how much the job market improves.

The unemployment rate has fallen to a four-year low of 7.7 percent, among many signs of a healthier economy.

“We are seeing improvement,” Bernanke said.